Column: Myron On Individual Financial Planning
[Opinion column written by Martha Harris Myron]
It is tough enough to manage money on a personal basis, let alone wading through the 110-pages multitude of complicated financial information issued by Bermuda Government March 2023 financial report.
Yet, the four vital financial planning principles are the same for all:
- individuals,
- businesses,
- institutions, and
- governments.
So, let’s briefly compare government financial planning to us ordinary people’s money management, a real challenge these days given that many Bermuda islanders are just trying to keep our jobs and cost-of-living above water.
1: A Contingency [rainy day] fund
Personal. Individuals and families fund a separate savings account for catastrophic events. Government recently incorporated the Sinking Fund into its every-day expense budget. Where is the contingency plan now?
2: Debt Management
Personal. A family home carrying a mortgage has a strict legal reduction of principal amortization plan. You, the owner, are financially responsible, period. No one else! Stop paying, your home goes into default, your lender becomes the owner.
Government: The 3.1 USD billion debt reduction plan is not clear. Government also issues financial loan guarantees for related parties and businesses.
In a repayment failure situation, the guarantor is legally bound to pay the debt.
- 2024 – Government paid the estimated 10 million debt on Bermuda Gaming Commission
- 2022 – 150 million on Morgan’s Point failed project
How many other guarantees [letters of comfort] are out there? Research indicates more may exist.
Positive Net Worth
Personal. The ultimate financial plan goal is a positive net worth. More assets: savings, investments, real estate, personal property, etc. than debt. You control your financial future, no one else.
Government. Negative net worth of BMD 4.4 billion. The Bermuda Auditor General Qualified Opinion March 2023 Bermuda Government Financial Report states there is insufficient support for asset retirement obligations.
Action
A financial plan on paper is meaningless without positive action and implementation. Get the facts. Think independently. Complacency or change – your choice.
Enough said.
- Martha Harris Myron is a born Bermudian US/UK national and an international pondstraddler finance journalist – marthamyron.com, contact martha.myron@gmail.com
